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Petitioner's application for exemption was denied by respondent
on September 20, 1994.
Discussion
1. Business Expense Deductions
As stated, petitioners claimed deductions for payments to
religious organizations on their Schedules C for the years 1990
and 1991. Respondent disallowed the deductions upon the ground
that petitioners failed to establish that the payments were
ordinary and necessary business expenses.
Respondent's determinations are presumed correct, and
petitioners bear the burden of proving that such determinations
are erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111,
115 (1933). Furthermore, deductions are a matter of legislative
grace, and the taxpayer bears the burden of proving that he or
she is entitled to any deduction claimed. Rule 142(a); INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice
Co. v. Helvering, 292 U.S. 435, 440 (1934); Welch v. Helvering,
supra.
In general, section 162(a) provides a deduction for all
ordinary and necessary expenses paid or incurred by a taxpayer
during the taxable year in carrying on a trade or business. As
used in section 162(a), "ordinary" has been defined as that which
is "normal, usual, or customary" in the taxpayer's trade or
business. Deputy v. DuPont, 308 U.S. 488, 495 (1940).
"Necessary" has been construed to mean "appropriate" or "helpful"
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